Bankrupt Hostess Gets $27.5M Stalking-Horse Bid for Drakes

Bankrupt Hostess Brands Inc. has named Mountain States Bakers LLC and McKee Foods Corp. as the stalking horse bidders for some of its bread assets and its Drake’s snack brand, respectively.

McKee Foods is the stalking horse, or lead bidder, for Drake’s with a $27.5 million bid. The Drake assets include the Coffee Cakes, Devil Dogs, Funny Bones, Ring Dings Sunny Doodles, Yankee Doodles and Yodels brands, as well as fruit cakes and cookies

Mountain States, a wholly owned subsidiary of United States Bakery, is the stalking horse for Hostess’ Sweetheart, Standish Farms, Grandma Emilie’s and Eddy’s bread brands with a $28.85 million bid.

Both bidders would also assume certain brand-related liabilities through the agreements, which were filed Jan. 28.

Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan will preside over a hearing to approve the bidding procedures on Feb. 11.

Hostess has requested an auction for the two sets of assets be held on March 15 and a sale hearing held on March 19.

The Tastykake owner bid $360 million for 20 bakeries and the Butternut, Home Pride, Merita, Nature’s Pride and Wonder bread brands, plus a separate $30 million bid for the Beefsteak rye-bread brand.

Flowers is headed to a Feb. 28 auction, since Drain approved that set of bidding procedures in an order dated Jan. 28. A sale hearing for those assets is scheduled for March 5.

Hostess decided to wind down operations after it failed to resolve issues with striking bakers’ union. The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union (BCT) and other unions started striking on Nov. 9, which caused the company to lose between $7.5 million and $9.5 million in a matter of weeks, according to court documents. The strike came after troubled negotiations regarding collective bargaining agreements (CBAs).

The baker filed for bankruptcy protection on Jan. 11. When the company sought bankruptcy protection, it operated 36 bakeries, 565 distribution centers, 5,500 delivery routes and 570 bakery outlet stores in the U.S.

Hostess, founded in 1930, was one of the largest wholesale bakers and bread distributors in the U.S. In addition to Twinkies, the company’s brands also include Dolly Madison, Twinkies and Drake’s.